Fewer Residents Covered Under Utah Medicaid Law at Greater Cost, Organizations Say

The bill signed into law this week in Utah scaling back the successful voter referendum last fall that paved the way for a Medicaid expansion means that fewer people will be covered at potentially higher cost, according to organizations that recently published briefs on the issue.

State senators voted 22-7 to adopt the House version of SB96, which seeks a partial Medicaid expansion April 1. The governor, Gary Herbert, signed it into law Tuesday, saying that the bill was more sustainable over the long term.

The voter initiative, Proposition 3, sought to expand Medicaid, as allowed under the Affordable Care Act, to approximately 150,000 residents earning up to 138% of the federal poverty level (FPL) on April 1.

Under the new law, the state will seek reapproval for a CMS waiver that was previously rejected, which would change the cost percentages shared by the state and federal government, covering fewer people at greater state expense. The Center on Budget and Policy Priorities (CBPP) said last week that the bill is very similar to the waiver request that Utah sent to CMS last year. After enough votes for the ballot initiative were collected, but before the fall election, the state submitted the request.

It seeks an expansion only for those earning up to 100% of the FPL, includes an enrollment cap, and also has a work requirement.

Approval of the state’s request is uncertain, but the effects on residents are immediate.

Under the new law, partial expansion would take effect only if CMS agreed to let Utah suspend new enrollment “at will if at any point it decides it doesn’t have enough money.” CMS has never allowed this approach before, CBPP said.

In addition, coverage will be delayed unless CMS suspends its normal approval process for waivers and, in this case, for a waiver that it previously rejected. Also, Utah would initially pay more money to cover fewer people. SB96 will cause 48,000 fewer newly eligible people to enroll in Medicaid than the full expansion plan voters approved, which would cover approximately 150,000 people.

Under CMS rules, states can only receive the ACA’s enhanced federal match rate of 90% if they cover the entire expansion group.

With full expansion of Medicaid, states cover 10% of Medicaid with the federal government. But under SB96, Utah would initially receive its normal 68% federal match rate for its partial expansion, meaning it will shoulder 32% of the cost, and not 10% percent.

Utah would pay $50 million more to cover 48,000 fewer people through Medicaid, the CBPP said, citing a document prepared for the legislature. That’s because it will cost more to pay for 32% of the costs for covering about 100,000 people, versus 10% of the cost of covering about 150,000 people.

Under the law signed Monday, those who would have otherwise been included in the expansion population can purchase subsidized health insurance plans on the exchanges. The change means that under the law, those individuals making $12,490 or less per year and families of 3 with income of $21,330 or less per year in 2019 (100% of the FPL) would qualify for Medicaid. Under the voter-backed Proposition 3, the limits would have gone up to $17,236 for an individual and $29,435 for a family of 3, FamiliesUSA said.